Alcohol in Worker’s System Isn’t Enough to Prevent Award

Ruling: In an unpublished decision, the Virginia Court of Appeals held that a worker was entitled to benefits.

What it means: In Virginia, to prevent recovery based on a worker’s intoxication, the employer must establish that the worker’s intoxication was the cause of his injuries.

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Summary: A worker for a subcontractor on a construction project was climbing a ladder when the ladder wobbled and then fell sideways. The worker sustained injures to his right wrist and elbow, two fractured ribs, and a punctured lung. He admitted to consuming alcohol the night before the incident. He denied drinking that morning before work. Tests after the accident indicated that he had alcohol in his system. The worker filed a claim for workers’ compensation benefits. The employer denied the claim, asserting that he was barred from receiving benefits because of his intoxication. The Virginia Court of Appeals held that the worker was entitled to benefits.

The Workers’ Compensation Commission concluded that the worker suffered an accident arising out of and in the course of his employment. The commission also found that the employer proved that the worker was intoxicated at work, that it had a safety rule prohibiting employees from being at work while under the influence of alcohol, and that the worker willfully violated that safety rule. However, the employer had to establish that the worker’s intoxication and willful violation of the safety rule caused his injuries. The court found that the employer failed to meet this burden.

The commission found that the worker’s fall was caused by the inherent dangers posed by working on ladders. The employer reasoned that a toxicologist’s opinion that the worker’s fall was caused by his intoxication satisfied its burden of proof. However, the commission remained unconvinced that the worker’s intoxication caused the fall.

What it means: In Idaho, palliative, painkilling treatments can be compensable even though they will not necessarily cure the worker’s condition.

Summary: A cashier for Home Depot slipped on the floor and injured her right knee. She underwent three surgeries. Three months after her third surgery, her physician concluded that she reached maximum medical improvement but that she needed continued pain management. An independent medical examination recommended that she stop taking pain medication. Home Depot stopped paying for her medical care. The cashier sought continued medical care benefits. The Industrial Commission denied the claim, finding that the medical care she received after she reached MMI was unreasonable. The Idaho Supreme Court held that the commission improperly denied the claim.

The court explained that MMI was not relevant to the reasonableness of continuing medical care. The court also found that the commission erred in retrospectively analyzing the efficiency of the cashier’s continued medical care to determine reasonableness.

The court said that palliative, painkilling treatments can be compensable even though they will not necessarily cure a worker’s condition. The court declined to deviate from this principle even if the pain management treatment consists of prescribed pain medication that results in addiction or dependency, which in turn requires additional treatment. The court explained that requiring an injured worker to endure pain without medications is inconsistent with the humane purposes of the workers’ compensation law.

A concurring judge opined that palliative treatment can be reasonable even when it is ineffective in retrospect. The judge said that it is proper for the commission to consider whether a worker was suffering from opioid addiction at the time opioids were prescribed in determining whether the prescription was reasonable. In this case, the judge noted “red flags” that should be considered.

Disobedience Doesn’t Bar Claim

Chandler Telecom LLC, et al. v. Burdette, No. S16G0595 (Ga. 02/27/17)

Ruling: The Georgia Supreme Court reversed a decision awarding benefits to a technician and sent the case back to the Board of Workers’ Compensation to determine whether he intentionally violated instructions with the knowledge that it was likely to result in a serious injury or with a wanton and reckless disregard of its probable consequences.

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What it means: In Georgia, an intentional violation bars compensation only when done either with the knowledge that it is likely to result in serious injury or with a wanton and reckless disregard of its probable injurious consequences.

Summary: A cell tower technician for Chandler Telecom was supposed to climb down a cell tower. The lead tower hand on the crew instructed the technician to climb down, but he stated that he wanted to use controlled descent instead. As the technician was descending, he fell and landed on an “ice bridge,” causing serious injuries to his ankle, leg, and hip. He sought workers’ compensation benefits. The Board of Workers’ Compensation denied benefits, finding that the technician was engage in willful misconduct. The Court of Appeals reversed, concluding that the technician’s conduct did not constitute willful misconduct. The Georgia Supreme Court reversed and sent the case back for the board to consider whether the technician intentionally violated instructions with the knowledge that it was likely to result in a serious injury or with a wanton and reckless disregard of its probable consequences.

The court explained that the mere violation of instructions or the mere doing of a hazardous act in which the danger is obvious cannot constitute willful misconduct. The court pointed out that the board did not make any findings as to whether the technician intentionally violated the lead’s instructions either with the knowledge that it was likely to result in serious injury or with a wanton and reckless disregard of its probable consequences.

Ruling: The Minnesota Supreme Court reversed the Workers’ Compensation Court of Appeals and held that the compensation judge properly determined that a school bus monitor did not suffer from a concussion and post-concussive syndrome.

What it means: In Minnesota, a medical expert need not be provided with every possible fact but must have enough facts to form a reasonable opinion that is not based on speculation.

Summary: A school bus monitor for the Independent School District 152 was riding in a bus traveling at 15 miles per hour when the bus suddenly braked. The sudden stop caused the monitor to fall, strike the left side of her head on the bus’s front console, and land on her left arm. She sought workers’ compensation benefits for the treatment of her injuries, including emotional and psychological conditions. The compensation judge denied coverage of emotional and psychological injuries, finding that the monitor did not suffer a concussion and post-concussive syndrome. The Workers’ Compensation Court of Appeals reversed, reasoning that a physician who conducted an independent psychological examination lacked factual foundation for his opinion. The Minnesota Supreme Court reversed the WCCA’s decision.

The WCCA stated that the physician who conducted the independent psychological examination lacked an adequate factual foundation for his opinion because he did not review the video of the accident. The court pointed out that the WCCA did not explain why the video was probative on the medical consequences of a blow to the head. The court also noted that none of the monitor’s treating physicians viewed it. The physician reviewed the monitor’s preinjury medical history, reviewed the majority of her postinjury medical records, conducted tests, and personally interviewed the monitor.

The WCCA also took issue with the physician’s contention that the employee denied altered consciousness until two weeks after the injury. The court found that the WCCA took this comment by the physician out of context. The physician found that the monitor did not report memory loss on the day of the accident and mentioned this symptom two weeks later. The physician found the monitor’s self-reported symptoms were not credible.

The court concluded that the compensation judge properly relied on the physician’s opinion that the monitor did not suffer from a concussion and post-concussion syndrome.

Post-Injury Car Accident Doesn’t End Original Claim

Appeal of Morin, No. 2016-0078 (N.H. 02/01/17)

Ruling: The New Hampshire Supreme Court held that a nurse established a causal relationship between her continuing medical treatment and her work-related injury.

What it means: In New Hampshire, the progression of a work-related condition remains compensable as long as the worsening is not shown to have been produced by an independent, intervening cause.

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Summary: A registered nurse for Androscoggin Valley Hospital injured her neck while assisting a patient. She underwent surgery. After surgery, she continued to experience neck pain, shoulder discomfort, occipital headaches, arm aches, and numbness in her fingers. Her neurosurgeon referred her for pain management treatment. The pain management doctor recommended that the nurse use a TENS unit. During this time, the nurse was involved in a motor vehicle accident. The neurosurgeon opined that the motor vehicle accident temporarily increased her symptoms but that “subsequently settled down.” The hospital’s workers’ compensation insurance carrier denied three claims for pain management treatment and a claim for the TENS unit. The New Hampshire Supreme Court held that the nurse established a causal relationship between her continuing medical treatment and her work-related injury.

The court found that the nurse proved medical causation. The neurosurgeon opined that it was clear that her continuing medical treatment was causally related to her work injury and not to her motor vehicle accident. The neurosurgeon said it was highly unlikely that the motor vehicle accident would have resulted in any chronic injury. Nothing in the workers’ compensation law required a worker’s physician to state his opinion expressly in terms of “reasonable medical probability.”

The court noted that the hospital’s workers’ compensation carrier did not challenge the reasonableness and necessity of the treatment.

Fall Down Stairs at Home Sinks Claim for Benefits for Prior Injury

Ruling: The Arkansas Court of Appeals held that a worker was not entitled to additional treatment and benefits.

What it means: In Arkansas, benefits are not payable for a condition that results from a nonwork-related independent intervening cause following a compensable injury.

Summary: A worker for Ken’s Signs suffered a compensable shoulder injury. After surgery, he reported to his physician that he had no inflammation or pain and a full range of motion. The physician found he was at maximum medical improvement. The worker subsequently ended his employment with Ken’s Signs and took a higher-paying job with another employer, where he performed maintenance work on machines. After eight months, he was terminated. The worker fell down the stairs in his home and sought emergency medical treatment. Later, he returned to the physician and complained of pain in his shoulder. The worker did not report that he had fallen at home. The physician recommended surgery. The worker argued that he was entitled to additional medical treatment and benefits. The Arkansas Court of Appeals held that he was not entitled to additional treatment and benefits.

The court found that the worker failed to link his subsequent shoulder pain to his compensable injury. The court pointed out that he sought emergency treatment for his fall down the stairs at home but did not mention this incident to the physician.

The court also found that the worker failed to prove that he was entitled to temporary total disability benefits or permanent partial disability benefits. His physician found that he reached MMI. Also, following his surgery, he worked for eight months performing manual labor at a wage greater than what he earned before the injury, indicating that he did not have a partial or total incapacity to earn wages.

Christina Lumbreras is a Legal Editor for Workers' Compensation Report, a publication of our parent company, LRP Publications. She can be reached at [email protected]

According to a survey conducted by The Hartford in Q2 2017, 80 percent of mid-to-large size companies in the U.S. are engaging in overseas business, ranging from executive travel all the way to manufacturing. Globalization and technology create opportunities to tap into new markets, and companies that don’t take advantage of those opportunities risk losing out to competitors that do.

“Eighty percent of mid-size companies have some type of international exposure, and we expect that these companies will only continue to increase their international activities going forward,” said Alfred Bergbauer, Vice President and Head of Multinational Underwriting, The Hartford.

Most mid-sized companies address their international exposure via a global master policy, which is issued in the U.S. and provides blanket terms and conditions to all of an insured’s operations, including those outside the U.S. Buyers may believe it fully covers any exposures faced abroad, but a U.S. global master policy may not operate as traditional local insurance would. For example, it may not be recognized by a local regulator and may be inconsistent with local law. Thus, the performance of the insurance may not be in line with the insured’s expectations of how the policy should perform in the event of a loss or where a certificate of insurance is required.

As a result, the U.S. issuing carrier may not be able to respond to a loss arising at an insured’s facility outside the U.S. as the insured might expect, and payments or reimbursements made to the insured resulting from that policy could carry significant tax penalties or fees.

“A U.S. contract cannot bend the rules and regulations of a sovereign nation,” Bergbauer said. “A U.S. master policy may be inconsistent with local insurance terms and conditions, norms and practice and thus cannot always address local country risk needs as a local policy issued in that country would. For risks located outside the U.S., such as risks arising from operations in other countries, master policies should be paired with coordinated, locally issued insurance policies.”

Brokers and buyers unaware of the specialized insurance structures required to legally transact business abroad could face the following three unintended consequences:

1. If the insured suffers a loss, they might not be indemnified.

Alfred Bergbauer, head of Multinational Insurance

Domestically, U.S. companies have very clear expectations for their insurers. If the insured suffers a compensable loss, they want their carrier to pay the claim ―whether it’s first- or third-party― and hire counsel to represent them if necessary. In other words, they expect full indemnity.

But this basic expectation for indemnification is not automatic in foreign countries. If an insured does not have a local policy and suffers a loss, an expedient claims payment may not always occur.

That is, “Without a local policy, the U.S. policy may not behave as the customer would expect it to,” Bergbauer said. “For example, in some countries, it may be more difficult to hire counsel, to utilize a claim adjuster to pay a local third party, and crucially, pay the insured’s local operation which suffered the loss.”

2. Claims payments could be subject to U.S. taxes.

If an insured has only a U.S. master policy, the insured’s foreign operation would be responsible for covering the loss in the foreign country and the U.S. insured would then seek reimbursement from its insurer in the U.S.

However, a claim payment made in the U.S. to cover a loss suffered by foreign entity is considered a taxable event in the eyes of the IRS.

“The IRS takes the view that the insured has no loss to offset against this payment, resulting in the payment being taxable at the U.S. corporate income tax rate —currently 21 percent,” Bergbauer said.

“It can be a very uncomfortable situation if the broker or insured were unaware of that dynamic.”

Getting hit with such a significant and unexpected tax leaves the insured short of the funds needed to recover from a loss, and threatens the trust placed in their broker to educate them about this exposure.

3. Failure to obtain insurance from a local carrier exposes the insured to many risks.

If an insured’s local operations are required to obtain property or liability cover from a local insurer either by local law or because the local operations need to provide certificates of coverage from local insurers, insurance provided by a U.S. insurer may not address these requirements.

“If the local regulator finds evidence that a local operation does not have insurance provided by a local carrier where it is required to do so, it can issue penalties against both the broker and the policyholder,” Bergbauer said. “China, for example, has issued penalties for unlicensed insurance equal to five times the amount of the illegal claim payment.”

Beyond a sizable bill, such companies also stand to take a hit to their reputations.

“You want to be viewed as an upstanding corporate citizen in the markets where you operate.” Bergbauer said.

“If a local newspaper calls you out for breaking the law, it can be tough to recover from.”

An Intensifying Exposure

All of the above risks stem from relying on a Global Master Insurance policy which does not leverage locally admitted policies. The risks associated with covering risks arising from foreign operations without local policies have always existed, but they have flown under brokers’ radar because enforcement of local insurance laws was relatively lax.

That is no longer the case.

Today, ministries of finance and regulatory authorities have started collaborating across borders to share information about foreign investment trends and audits conducted on foreign firms, even entering multilateral agreements to identify violators of insurance law.

“They look for the most egregious offenders and make examples of them,” Bergbauer said.

In light of the enforcement crackdown, multinational companies can ill afford to be uninformed of their international insurance risks or the solutions available to address them. Sophisticated brokers in the U.S. may be experts on domestic regulatory requirements, but too often they lack knowledge of varying rules and regulations outside our borders, and of the solutions available to fulfill them.

“Most companies with international exposures are never approached by their broker to discuss those risks and delve into the best way to insure them,” Bergbauer said.

“Brokers do not spend enough time discussing the extent of their customers’ international activities, or how their policies will respond to them. So we’re going out to our broker network and teaching them how to have this conversation.”

Keys to Compliance: Education and the Controlled Master Program

Through seminars, informational bulletins and one-on-one conversations, The Hartford is reaching out to agents and brokers to make education and awareness of regulatory risk a priority. And it offers a solution to fill in the gaps where a global master policy may fall short of local standards: a Controlled Master Program, or CMP.

The Controlled Master Program differs from a Global Master Policy in a few important ways. Primarily, it allows for the placement of locally-issued admitted policies along with a U.S. master policy, while keeping the administration, claims and risk control services consolidated with one single carrier.

This means clients have a single point of contact, no matter where they have insurable assets or where they incur a loss. A comprehensive global program administered by a single carrier presents the most streamlined and efficient way to address risk exposures arising out of international activity.

The Hartford leverages its global network infrastructure — spanning 150 countries around the globe — to identify where admitted insurance is required and then places good local standard policies in compliance with local regulations. By taking a holistic underwriting approach to the entirety of a company’s exposures, the negative consequences outline above can be avoided. The CMP offers the benefits of cost efficiency, claims consistency, an increased level of control for the buyer, and better regulatory compliance.

“The Hartford’s Controlled Master Program provides the coverage that you expect in the U.S., wherever you have exposure. Alignment among underwriting, risk control services and claims guarantee consistent loss response and level of service across the board,” Bergbauer said.

Perhaps most importantly, The Hartford’s proactive outreach ensures brokers are equipped to discuss and address their clients’ international exposures, helping ensure they don’t have to learn the consequences of providing coverage without local policies the hard way.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with The Hartford. The editorial staff of Risk & Insurance had no role in its preparation.

The Hartford is a leader in property and casualty insurance, group benefits and mutual funds. With more than 200 years of expertise, The Hartford is widely recognized for its service excellence, sustainability practices, trust and integrity.